China encourages share-holding reform for some of its weapons makers in a bid to expand financial and technical support, according to the recently issued government guidelines.

The reform does not cover those which design and produce the strategic and other major weapons that involve core state secrets and have a direct bearing on the national security, said the guidelines.

The guidelines were jointly issued by the Commission of Science, Technology, and Industry for National Defense, the National Development and Reform Commission and the State-owned Assets Supervision and Administration Commission.

The guidelines encourage domestic and even foreign investors to acquire shares in the less important military firms including those who produce civil products and allow the firms in some cases to raise funds in the capital markets.

The amount of shares in the defense firms still held by the state depend on the importance of the weapons produced by these firms, said the guidelines approved by the State Council, or cabinet, without providing further details.

The weapons makers solely-owned by the state should establish the system of the board of the directors gradually and are encouraged to buy into each other and conduct core business restructuring.

The profound reform will help the weapons producers boost their self-innovation abilities, become true market players and ultimately improve the competitiveness of China's defense industry.

(Xinhua News Agency June 23, 2007)